Top Performers Still Get Generous Pay Bumps

August 14, 2008 (PLANSPONSOR.com) - Top-performing
employees and those in industries that have stayed healthy
despite the economic downturn should walk away from their
salary reviews with generous increases, a new study
indicates.

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The latest salary poll from Mercer found
that although pay increase budgets remain virtually constant on a
year-over-year basis, organizations are broadening
performance differentials by granting notably beefier
salary increases to their top performers, according to a
news release. The highest-performing employees (14% of the
workforce) are expected to receive base pay increases of
5.6% in 2009 compared to 3.3% for average performers (36%
of the workforce) and 0.6% for the weakest performers (7%
of the workforce).

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In general, U.S. employers plan to award average pay
increases of 3.7% in 2009, compared to 3.8% in 2008.

class=”NormalIndent2″>Increases to base salaries
differ among all industry sectors. Compared to the expected
average pay increase of 3.7% in 2009, U.S. employers within
high-performing industries plan to grant salary increases
that are up to one-quarter higher, Mercer said. The oil and
gas and the business process outsourcing industries report
the highest projected pay increases of 5% and 4.7% for
2009, respectively.

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“The tight economy has made the marketplace extremely
competitive,” said Steve Gross, global leader of Mercer’s
broad-based performance and rewards consulting business, in
the news release. “Despite budgetary constraints in other
sectors, growth industries are likely to boost salaries to
attract and retain talent required to continue their
performance levels.”

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Mercer’s survey shows companies widening performance
differentials for short-term incentive payouts, as well.
The highest-performing management level employees are
expected to receive average short-term incentive payouts of
36% compared to just 8% for the lowest performers.
Similarly, incentive payouts for high-performing
office/clerical/technical positions at 13% are more than
four times that of the low performers in the same group
(3%), Mercer said.

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In contrast, other industries expect to award less
than average pay increases in 2009. Retail is among these
sectors with a projected increase of 3.4%, and wholesale
distribution, durable goods and education sectors project a
3.5% increase.

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Mercer’s study, which has been conducted annually for
more than two decades, includes responses from more than
1,000 employers across the U.S. and reflects pay practices
for more than 12 million workers. The survey results are
captured for five categories of employees: executive,
management, professional (sales and non-sales),
office/clerical/technician, and
trades/production/service.

class=”NormalIndent2″>To purchase the full report of
the survey, visit
www.imercer.com/cps
or call 800 333 3070.